Global Financial Crisis 2008-09, Macro-Economic Variables and the Performance of FTSE Bursa Malaysia Hijrah Shariah Index: A Case of Malaysian Stock Market

Abstract

Very little literature is found on the topic of Islamic finance. In some research, only in theoretical form. This generated a need for an empirical examination of the prices of Sharia-compliant stocks. The present study analyzed the performance determinants of the FTSE Bursa Malaysia Hijrah Shariah (FBMHS) index. For this purpose, data from the year 2001 to 2016 was selected and the Ordinary Least Squares (OLS) technique was applied. The results of the study indicate that FBMHS performance remained resilient against the inflation rate. The positive impact of inflation on FBMHS index indicates that shariah compliant stocks provide protection to the investor against the inflation rate. Moreover, an increase in exchange rate proved to be detrimental to FBMHS index performance. However, interest rate and Global Financial Crisis (GFC) 2007-09 showed no effect on FBMHS index performance. The present results give valuable insight for the managers, policymakers and investors with respect to FBMHS Index behaviour specifically in the Malaysian economic environment.